OPINION: Indonesia-US economic ties likely to grow

Jakarta (The Jakarta Post/ANN) - With the US economy showing clearer signs of recovery, Indonesia's Ambassador to the US, Dino Patti Djalal, one of the most trusted aides of President Susilo Bambang Yudhoyono, says targets to double bilateral trade value in five years and increased US investment in Indonesia are both very likely scenarios. In a conversation in Washington with The Jakarta Post's Linda Yulisman, he elaborated his optimism and highlighted existing challenges to achieving the targets.

Below are excerpts from the conversation:

Question: What is the state of our current economic relations with the US, particularly in the trade and investment sector?

Answer: Economic relations are very good now, especially in trade and investment. If I'm not mistaken, our trade has reached US$26.5 billion in 2011 [up by 17 per cent from 2010], which is perhaps one of the highest, if not the highest trade figure that we have in our relationship. And the growth is quite significant, especially since [US] President Barack Obama's visit to Indonesia.

The rising investment is also significant. When Obama came to Indonesia, he said the US was not happy with being number three. US investment in Indonesia reached $1.5 billion last year [third largest after Singapore and Japan].

A lot of American businesses have noticed that Indonesia has now reached investment grade and that has significantly boosted our reputation in the US, especially at a time when the global economic recovery is still somewhat fragile and a lot of countries and companies are being downgraded. Indonesia is being upgraded.

I do also notice a stronger business interest in Indonesia. Indonesia is seen as one of the success stories in Asia along with China and India, of course. Indonesia is seen as not just promising, but a dynamic and unique market by American businesses and with that, a number of business delegations to Indonesia have returned with very good impressions. So, I'm quite optimistic that the economic relationship for the future will be even better.

Trade and investment are also now a key part of the joint commission meeting [JCM] that has been held annually. We have six working groups and trade and investment is among them. For the first time, we also now have commercial dialogues for the first time between Indonesia and the US and this reflects the commitment of both sides to strengthen their commercial relationship with each other.

Is there any certain target set for trade in the next few years?

Yes, there's a target to double the trade figure and it was mentioned in the joint statement between President Obama and President Yudhoyono when they met in 2010. So, there's a target of doubling the figure in five years.

I'm not sure there's a specific target on investment, we just said "enhance it". We definitely want more American investment. President Obama stated he didn't like being number three, so I'm sure America will want to be the number one investor again. But to do that, they have to really compete with the others and we also have to provide the corresponding facilities to get more American businesses to come in.

What is currently the biggest hurdle to American investment in Indonesia?

I don't think there's a major hurdle. I think it's just a matter of getting more people to know about what the opportunities are. For example, on the master plan [for the acceleration and expansion of Indonesian economic growth, MP3EI], there are a lot of projects and capital needed. Some American companies are learning more about it and some are trying to take part in it.

I think an opportunity that Indonesians should see is the US Ex-Im [Export-Import] Bank. The Ex-Im Bank had a great success story with the Lion Air deal. It financed Lion Air's purchase of Boeing and in fact, the last one was the biggest deal ever made by Boeing.

But the problem is the success story is very limited. There's been only very few Indonesians who are taking the advantage of the financing facilities of the Ex-Im Bank. I hope more Indonesians will take advantage of this facility.

Are there any American companies that have expressed an interest in joining the master plan for economic development?

Well, there are a few, but I am not sure I should name them before everything is signed. Every time we see American companies we tell them about the project.

In what sectors are they most interested in?

There are some discussions on the industrial parks. I believe there's something also in transportation, if I'm not mistaken, and infrastructure, obviously.

At this time they have been quite heavy in mining. Obviously we welcome their investment in mining, but we want their investment to be broader, more than just in mining. We want them to be in manufacturing, for example.

This is one thing that we've been trying to galvanise in terms of our relationship with American business. In agriculture and geothermal sectors, there are a lot of opportunities.

US business is also trying to get into the creative industries. I think this is one of the areas that need to be explored more: how American innovators can connect with Indonesian innovators. We've had the recent success story of Koprol, an Indonesian company that just joined Yahoo.

When I asked Yahoo how they saw Indonesians working in Koprol, they said they were as good as their own people in Silicon Valley. So again, the IT cooperation between the two is an exciting example, but getting together the innovation communities on both sides and trying to draw connections between them is one of the areas that we need to intensify.

How do you see the prospects for Indonesian exporters to boost their trade to the US in the near future?

The prospects are quite good. As I said, they need to be more aggressive and seek out more opportunities. There's Ex-Im Bank when they need some financing and the GSP facilities can help them. There's always opportunities to better penetrate the American market.

I think that we should take the benefits. The US palm oil market for example is 95 per cent controlled by Malaysians and we are only using 5 percent. We have to do a lot more for it.

In the furniture sector, there are also many opportunities. Our furniture is first class but the problem is how we convey that message. We're taking part in some trade fairs in the US this year, but we need to do better in how we handle those fairs.

Sometimes when we do the trade fairs, we have the products but the companies don't take part. And when the people want to buy the product, they can't negotiate with the companies because no representatives from the company are taking part. Small things like that sometimes can make a big difference.

And again, one thing that we need to fix is that there are extremely few upscale Indonesian restaurants in the US. Again, I don't know why. But Indonesian restaurants can function as a good ambassador for our country and even for tourism promotion.

The Indonesian business community should be more aggressive in penetrating the American market. These may not be big investments, but yes, there are a rising number of Indonesians who are investing in the US.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippine, Vietnam troops play sports on disputed island
    Philippine, Vietnam troops play sports on disputed island

    Filipino and Vietnamese troops played football and tug-of-war on a disputed South China Sea island on Wednesday, officials said, closing ranks as their rival China ramps up construction of artificial islands. The games took place on Philippine-held Northeast Cay, just 2.7 kilometres (1.7 miles) from Southwest Cay which is controlled by Vietnam, where a similar contest was held last year. "It was a navy-to-navy confidence-building engagement," Vice Admiral Alexander Lopez, the Philippine …

  • ‘Inland areas could be exposed to tsunami-like waves’
    ‘Inland areas could be exposed to tsunami-like waves’

    While strong earthquakes cause tsunamis in coastal areas, the Philippine Institute of Volcanology and Seismology (Phivolcs) warned that inland areas could also be exposed to tsunami-like waves, or seiche, if located near or around bodies of water. In a recent earthquake awareness seminar in Muntinlupa, Phivolcs supervising science research specialist Joan Salcedo explained that a seiche is a large wave similar to a tsunami, triggered by strong ground shaking from an earthquake or volcanic …

  • China gives ‘gentle reminder’ to Phl, warns small nations
    China gives ‘gentle reminder’ to Phl, warns small nations

    China gave the Philippines a “gentle reminder” last Tuesday that Beijing will not bully small countries but warned these nations not to make trouble willfully and endlessly. “Here is a gentle reminder to the Philippines: China will not bully small countries, meanwhile, small countries shall not make trouble willfully and endlessly. The Chinese Foreign Ministry also said that China would continue to build other civilian facilities on relevant maritime features in the disputed Spratly Islands …

  • Back-channel diplomacy pushed for Phl-China dispute
    Back-channel diplomacy pushed for Phl-China dispute

    The Philippines should consider backchannel diplomacy to prevent its territorial dispute with China from deteriorating further, Sen. Ferdinand Marcos Jr. said yesterday. There are a lot of Filipino businessmen with businesses in China and they have friends and connections there. Let’s utilize that, ask them to talk to their friends on how we can resolve this matter peacefully,” Marcos said. …

  • Phl, Japan to deepen ties amid China sea claims
    Phl, Japan to deepen ties amid China sea claims

    Japan and the Philippines are set to bolster security ties when President Benigno Aquino visits Tokyo next week, the latest move by Prime Minister Shinzo Abe to beef up cooperation with Southeast Asian nations facing China’s growing naval ambitions. The two sides will likely agree to start talks on a framework for the transfer of defense equipment and technology and to discuss a possible pact on the status of Japanese military personnel visiting the Philippines to facilitate joint training and …

  • Phl, Vietnam troops play soccer on disputed isle
    Phl, Vietnam troops play soccer on disputed isle

    Vietnamese and Philippine troops played soccer and sang karaoke on a South China Sea island yesterday in a sign of the growing security ties between the two Southeast Asian nations most at odds with Beijing over the contested waterway. Cooperation has blossomed between Hanoi and Manila since they shelved decades of enmity over their competing claims in the Spratly archipelago to try to counter China, whose creation of artificial islands in the region will allow it to project power deep into …

  • Noy swears in 50 newly appointed AFP officers
    Noy swears in 50 newly appointed AFP officers

    President Aquino administered yesterday the oath taking of 50 newly appointed generals and officers of the Armed Forces of the Philippines (AFP) in a simple ceremony at the Rizal Hall of Malacañang Palace. …

  • Taiwan’s peace call on claimants of disputed territories welcomed
    Taiwan’s peace call on claimants of disputed territories welcomed

    The US on Tuesday welcomed Taiwan’s call on all claimants to disputed shoals, reefs, rocks and islets in the South China Sea and West Philippine Sea to exercise restraint, refrain from unilateral actions that could escalate tensions, as well as to respect international law as reflected in the United Nations Convention on the Law of the Sea. “With regard to the maritime claims and the claims to sovereignty over land features in the South China Sea, our position is that maritime claims must …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options